Small businesses fear higher Games hurdles

12:01AM GMT 16 Nov 2006

There are concerns that the construction tendering process is turning into an unfair playing field, reports Doug Morrison

Small businesses are in danger of being overlooked as the first wave of construction contracts for the 2012 Games begins to roll out from the Olympic organisers, according to Dee Doocey, the London Assembly's economic development spokesman.

Doocey says the Olympic Delivery Authority (ODA) and the London Development Agency are "awash with strategy". However, she bemoans a lack of transparency both in how they are performing and in the processes they have put in place for small firms to get involved.

"It's impossible for us to say they're on track or they're not on track because everything is done in total, top secret," says Doocey. Her comments come amid renewed fears over the cost and timing of the construction programme following the shock resignation of Jack Lemley as ODA chairman last month (see rbelow).

But Doocey is also concerned that there has been little progress since February when the assembly's economic development committee reported on the opportunities for business.

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A key issue for the assembly was that the much-vaunted economic regeneration legacy for London will not happen unless small local firms are fully involved.

It is no less of an issue today. "The problem we've found – and we found it with all of the businesses that we spoke to – is that there is an immense frustration that they're not getting information," says Doocey, who chairs the committee and is a Liberal Democrat member of the assembly.

"That's why one of the recommendations was a one-stop website so that people could just look up and see what's coming along next, what's going to be advertised or who can apply." She adds: "They all know there's loads of money to be made. They all want a piece of the action but they don't know how to go about it and there is nobody giving that sort of basic, clear advice."

The committee's report – The Business of the Games – suggests that small firms do not have the resources to get through red tape involved in contract tenders, especially if they are subject to European laws.

It also doubts the practicalities of such firms joining forces to bid for contracts, which the Olympic organisers advocate as one way forward.

The ODA has since appointed CLM as its private sector delivery partner and named Sir Robert McAlpine as preferred bidder for the main Olympic Stadium contract. It has also published its policy on contract procurement while other government agencies are starting to address what the committee report highlighted as "the need for a revolution in construction training" in London.

David Higgins, the ODA's chief executive, told the recent Parliamentary Select Committee hearing on the Games that he would push the main contractors to make sub-contracting opportunities available to "the widest possible range of businesses", particularly in east London.

Higgins added: "We are also working with our delivery partner to ensure that we can provide detailed information on forthcoming contracting activity and labour needs, which we can pass to local, regional and national bodies, so that they can tailor existing training and business support activity."

But Doocey maintains that most of the questions raised in the committee's report remain unanswered. She is calling for the ODA and rest of the organisers to publish targets for the involvement of small London firms, with the targets to be assessed independently every three months. "Until we monitor it, frankly, talk is cheap," she says.

Such a proposal was a recommendation of the committee last February but Doocey believes it is unlikely to happen until the Government sanctions a revised Olympic budget. A decision is due in the coming weeks although there has been speculation that the 2004 estimate of £2.375bn may soar to about £5bn, especially after Lemley's revelation that probable delays and likely overspends were among the reasons for his departure from the ODA. Says Doocey: "What I'm hoping is that when we get the budget they can put milestones in place."

She adds: "I've absolutely no doubt that the Olympics is going to be a great success. What I am really concerned about is that unless we get some delivery into this process it will not happen for small businesses."

Lemley's controversial explanation, in an Amercian newspaper, was a far cry from his passionate espousal of all things 2012 right up to his resignation as Olympic Development Authority (ODA) chairman in October – at the time ostensibly just to get back to his construction consultancy business.

The ODA insists the programme is on schedule but declines to comment on costs while embroiled in talks with the Government about renewing the £2.375bn Olympic development budget. Lemley's remarks have helped stoke speculation that it may spiral to £5bn, with the added worry that the Treasury may not exempt the ODA from VAT on construction as originally anticipated.

Lemley also declared his distaste for the "local politics" of relocating 300 firms from the Olympic site – "the kind of thing that confuses and frustrates the process".

His attitude provoked a scathing response from Dee Doocey, the London Assembly's economic development spokesman. "Part of the job is that you've got to be a very good negotiator – managing people and negotiating your way through different problems," she says.

"That was the job and if he didn't know that, frankly he should never have taken it."

Lemley was less than a year into the job when he quit. Deputy chairman Sir Roy McNulty has taken over in the meantime. The ODA says that with experienced industry players such as Amec boss Sir Peter Mason on its board there is no hurry to find a permanent successor.

But as Doocey says: "We ought to have somebody who can understand and work with politicians because this is going to get more political, not less political."